Do Urban Agglomeration Effects and Household Amenities have a Skill Bias?*

There are several hypotheses why urban scale affects wages. Most focus on agglomeration economies that increase labor demand, especially for high‐skilled workers (e.g., dynamic externalities stress knowledge transfers, and imply the urban wage gap favors skilled workers). Others stress urban amenities that increase labor supply and decrease wages. Amenities should have a stronger influence on affluent households if they are normal goods. By examining whether urban‐scale affects net returns to education, it can be determined whether skilled workers are influenced more by urban productivity or amenities. Empirical results suggest net returns to education decline with urban scale, implying a key role for urban amenities in affecting skilled workers.     

A HEDONIC MODEL OF INTERREGIONAL WAGES,RENTS, AND AMENITY VALUES*

ABSTRACT This paper develops a general multimarket hedonic model appropriate for a national, interregional study of wages, housing prices, and location-specific amenities. The model encompasses the effects of interregional location, intraurban location, and city size. Typically, hedonic studies focus on a single market such as labor or housing and ignore interactions implicit in a more global compensation mechanism. Examination of the comparative statics of our model indicates that single-market differentials are partial prices and are unreliable measures of amenity values in an interregional context. Unbiased amenity values are estimated for a comprehensive set of amenities using data on housing prices for 34,414 households and wages for 46,004 workers from the 1980 Census of Population and Housing. Statistically significant differences in housing prices and wages are found due to amenities.     

Immigration and the pursuit of amenities

Immigrants to the United States live disproportionately in metropolitan areas where nominal wages are high, but real wages are low. This sorting behavior may be due to preferences toward certain quality‐of‐life amenities. Relative to U.S.‐born inter‐state migrants, immigrants accept lower real wages to locate in cities that are coastal, larger, and offer deeper immigrant networks. They sort toward cities that are hillier and also larger and networked. Immigrants come more from coastal, cloudy, and safer countries—conditional on income and distance. They choose cities that resemble their origin in terms of winter temperature, safety, and coastal proximity.     

SOMETIMES CLOSE IS GOOD ENOUGH: THE VALUE OF NEARBY ENVIRONMENTAL AMENITIES*

ABSTRACT An extensive empirical literature exists, showing that variations in region‐specific amenities can account for persistent differences in real wages across regions. However, this literature has considered only amenities in the same location as the household. This paper argues that environmental amenities at some distance from but accessible to urban areas may lead to negative compensating wage differentials. We use a general equilibrium framework and data from the 1995 Current Population Survey to calculate implicit amenity prices based on measures of distance to environmental amenities. Our results suggest that amenities outside the metropolitan area do generate compensating wage differentials, as workers are willing to accept lower wages to live in accessible proximity to “nice” places. This implies that these places provide a positive externality to those communities that find them accessible. The estimated effects are quantitatively important, suggesting that these externalities should be taken into account in policy making.     

CITIES,WAGES, AND THE URBAN HIERARCHY

In this paper, we estimate the size of the wage premium necessary to compensate for remoteness incurred by workers compared to the city size productivity effects. We construct five urban hierarchy tiers for cities in Chile based on their level of remoteness from the urban system. We then contrast the effect generated by these variables on worker wages. We report a positive gradient of wages the higher the size of the urban tier and a loss in wages that can reach 35 percent for more remote cities.     

COMPENSATION FOR COMMUTES IN THE LAND AND LABOR MARKETS: SOME EVIDENCE FROM THE TOKYO METROPOLITAN AREA*

ABSTRACT. Recent research suggests that in nonmonocentric cities compensation for commutes takes the form of both lower housing prices and higher wages. This paper develops a random utility model that predicts the probability of an actor choosing to commute between each residence and job in a metropolitan area conditional on the observed location of housing units and job sites. The model allows commuting time, origin-specific amenities, land prices, destination-specific amenities and wages to influence actors' choices. We estimate the model using maximum likelihood and generalized least squares techniques and data on commuting between each of 38 origin and 15 destination jurisdictions in the Tokyo metropolitan area. The empirical results show that, all else equal, a one percent increase in commuting time reduces the probability that a route (origin-destination combination) will be chosen by almost five percent. Origin-specific amenities are not completely capitalized into land prices and destination-specific amenities are not completely capitalized into wages. Desirable residential amenities include school quality and a low ratio of day to night population. Desirable workplace amenities include a large share of white collar jobs and a high density of employment.     

Tourism,amenities, and welfare in an urban setting

Using data on Italian cities, we document that over the period of 2001–2011, the number of establishments and employment in some key service industries are positively related to the inflow of tourists. We then build a general equilibrium model of small open cities encompassing these empirical features to study the impact of tourism on endogenous consumption amenities, factors’ allocation across sectors, prices, and welfare. We also study the interplay of exogenous historical amenities, tourism, and residents welfare in a system of two cities. When residents are immobile, they are unambiguously better off when they live in a city with richer historical amenities, and thus more tourists, than the other city. When residents are mobile and their welfare is equalized between cities, the strength of consumption amenities becomes crucial to determine whether they are better off living in an urban system where cities are heterogeneous or similar in terms of historical amenities.     

Location choice,life cycle and amenities

Our study proposes a housing location choice model where a household faces a trade‐off between proximity to place of employment and proximity to amenities. We consider subsamples of high amenity cities and low amenity cities and households with and without children. We show that the roles of gender, education, homeownership, household composition, and public transportation vary significantly depending on level of amenities. Households with a female head of household, those with a working spouse and with older children prefer locating closer to downtown amenities. Female workers with and without children locate closer to work, in high and low amenity cities.     

WAGES,RENTS, UNEMPLOYMENT,AND THE QUALITY OF LIFE: A CONSISTENT THEORY‐BASED MEASURE

Combining a spatial equilibrium model with a search‐matching unemployment model, this paper analyzes the willingness to pay for regional amenities and the regional quality of life when wages, rents, and unemployment risk compensate for local amenities and disamenities. The results are compared with those obtained from the Rosen‐Roback approach. We demonstrate that the traditional approach gives too much weight to the wage differential if search frictions are significant. Furthermore, the paper confirms that the wage curve is negatively sloped for quasi‐linear utility. Specifically, the wage rate increases and the unemployment rate decreases in response to an increase in the amenity level if the amenity is marginally more beneficial to producers than to consumers.     

THE SOVIET METROPOLITAN HIERARCHY: REGIONALIZATION AND COMPARISON WITH THE UNITED STATES

The rapid growth of Soviet cities is converging toward a hierarchy similar to that of the United States. The numbers of aggregate populations of metropolitan centers by five size categories in the two countries are compared for growth and change from 1939 to 1976. Also, nine Soviet urban regions are identified, mapped, and correlated with comparable American groupings. Growth rates of Soviet metropolises are normalizing with less recent variation as compared to the 1939–59 period, a trend that parallels the one in the United States. Also, it appears that certain functions, such as administration and transportation, are stabilizing factors in urban growth. Governmental policies of investment in underdeveloped regions, balanced growth and diversification may be partially thwarted by five-year planning goals that have stimulated supragrowth in large cities of the South and East. However, it seems likely that increasing mobility, amenities and the expansion of consumer goods and services will produce a reversal of trends toward higher growth rates in the metropolitan centers of the West. Projections to the year 2000 suggest that Soviet metropolises will have a larger share of the national population and a more uniform growth pattern than those in the United States.     

AGGLOMERATION EFFECTS IN COLOMBIA

I estimate an elasticity of wages with respect to city population of about 5 percent for Colombian cities. This finding is robust to a number of econometric concerns. The second main finding is a negative effect of market access on wages. Third main finding regards stronger agglomeration effects in the informal sector. In turn, this explains a range of other negative findings, including only weak evidence in favor of human capital externalities, no evidence of a complementarity between cities and skills, and an absence of learning effects. I do not find measurable effects of roads or amenities on wages either.     

Mapping the arts: industry concentrations,distribution, and change in the US, 1980–2010

This paper studies arts industries in all 366 US metropolitan statistical areas between 1980 and 2010. Our analysis provides evidence that the arts are an important component of many regional economies, but also highlights their volatility. After radical growth and diffusion between 1980 and 2000, in the last decade, the arts industries are defined more by shrinkage and reconcentration in fewer metropolitan areas. Further, we find that the vast majority of metros have strengths in particular sets of arts industries. As we discuss in the conclusion, these conditions present challenges and opportunities for urban cultural policy that goes beyond the current focus on the arts as consumption amenities.     

Understanding Spatial Differentiation in Urban Decline Levels

The economic and demographic changes currently manifest in many Western cities—referred to as urban decline or urban shrinkage—are receiving increased attention in public and academic debates. Although the general processes driving these changes have been identified, such processes cannot explain why regions and cities which have been exposed to similar processes still differ in their economic and demographic developments. This Western European and US-based literature review attempts to answer the question of how this interregional and intraregional variation in levels of economic and demographic decline can be understood. It is argued that the degree to which wider societal forces (such as deindustrialization, changes in international and domestic migration and changing fertility levels) impact on a particular area depends on how these forces are filtered, first, through the institutional and, second, the spatial context that the region or city is located in. To understand the differences between the cities within one region (being part of the same institutional and spatial contexts), we need to descend to the city level and take account of the local (dis)amenities, comprising its physical, social and economic assets, and the influence of (the place characteristics of) other cities in the vicinity and the socio-political framework.     

LOCATION‐SPECIFIC HUMAN CAPITAL,LOCATION CHOICE AND AMENITY DEMAND*

ABSTRACT The role of amenities in the flow of migrants has long been a subject of debate. This paper advances an original model of amenities that work through household production instead of directly through utility. Area characteristics (amenities) affect household production, causing certain kinds of human capital investments to be rewarded more than others. Area heterogeneity thus makes such investments location‐specific. This specificity—along with a period of exogenous location—increases the opportunity costs of moving, diminishes migration flows between dissimilar locations and increases valuation of amenities that were present in the originating area. These theoretical results emphasize people's sorting across areas and thus differ from the results of the standard model of compensating differentials. Empirical tests of the model's predictions using NLSY79 data show that childhood investments affect migration flows in the way proposed by the model.     

Beautiful city: Leisure amenities and urban growth

Modern urban economic theory and policymakers are coming to see the provision of consumer‐leisure amenities as a way to attract population, especially the highly skilled and their employers. However, past studies have arguably only provided indirect evidence of the importance of leisure amenities for urban development. In this paper, we propose and validate the number of tourist trips and the number of crowdsourced picturesque locations as measures of consumer revealed preferences for local lifestyle amenities. Urban population growth in the 1990–2010 period was about 10% points (about one standard deviation) higher in a metro area that was perceived as twice more picturesque. This measure ties with low taxes as the most important predictor of urban population growth. “Beautiful cities” disproportionally attracted highly educated individuals and experienced faster housing price appreciation, especially in supply‐inelastic markets. In contrast to the generally declining trend of the American central city, neighborhoods that were close to central recreational districts have experienced economic growth, although at the cost of minority displacement.     

The social dynamics of attracting talent in Halifax

The paper reports a case study of factors attracting and retaining talented and creative workers in Halifax, Nova Scotia. All categories of workers interviewed mentioned quality of place and amenities in discussing their location preferences, but that could not fully explain their choices. For some occupations (like health research), talented people followed jobs; in other sectors (like music), talented workers migrated to a sympathetic locale with the right conditions for creative engagement; creative workers in some occupations (like those in architectural, engineering or planning consulting) were more rooted in place. The social dynamics—that is, positive and collaborative social networks within key sectors and a wider community perceived as welcoming and interesting—make this mid‐sized city attractive to talented workers. Local universities and a vibrant music scene generate a mutually reinforcing context that attracted mobile talented and creative workers to the city. Respondents noted Halifax's limited cultural diversity but did not report a perceived lack of tolerance as affecting their choices. In smaller cities, the social dynamics of place and workplace and the quality of life available may play more significant roles than tolerance in attracting and retaining talented workers, challenging a basic assumption of creative cities discourse.     

Market size,occupational self‐selection,sorting, and income inequality

We develop a monopolistic competition model with heterogeneous agents who self‐select into occupations (entrepreneurs and workers) depending on innate ability. The effect of market size on the equilibrium occupational structure crucially hinges on properties of the lower tier utility function—its scale elasticity and relative love‐for‐variety. When combined with the underlying ability distribution, the share of entrepreneurs and income inequality can increase or decrease with market size. When extended to allow for the endogenous sorting of mobile agents between cities, numerical examples suggest that sorting may increase inequality within and between cities.     

The changing geography of the Canadian manufacturing sector in metropolitan and rural regions, 1976–1997

This paper documents the changing geography of the Canadian manufacturing sector over a 22‐year period (1976–1997). It does so by looking at the shifts in employment and differences in production worker wages across different levels of the rural/urban hierarchy—central cities, adjacent suburbs, medium and small cities and rural areas. The analysis demonstrates that the most dramatic shifts in manufacturing employment were from the central cities of large metropolitan regions to their suburbs. Paralleling trends in the United States, rural regions of Canada have increased their share of manufacturing employment. Rising rural employment shares were due to declining employment shares of small cities and, to a lesser degree, large urban regions. Increasing rural employment was particularly prominent in Quebec, where employment shifted away from the Montreal region. The changing fortunes of rural and urban areas were not the result of across‐the‐board shifts in manufacturing employment, but were the net outcome of differing locational patterns across industries. In contrast to the situation in the United States, wages in Canada do not consistently decline, moving down the rural/urban hierarchy from the largest cities to the most rural parts of the country. Only after controlling for the types of manufacturing industries found in rural and urban regions is it apparent that wages decline with the size of place .     

Making space,making race: reconstituting white privilege in Buckhead,Atlanta

The comfortable relationship between the overwhelmingly white, southern Atlanta neighborhood of Buckhead and a major hub of nightlife in the region unraveled in the early 2000s as the entire nightclub cluster was delegitimized, discursively constructed as dangerous and out of control, and ultimately razed to make space for luxury shopping. This paper sets out to query what social and cultural relations account for this massive and unpredicted reconfiguration of urban space in the epicenter of wealth, whiteness, and power in Atlanta. By mobilizing the concept of the socio-spatial dialectic (Soja 1980, Annals of the Association of American Geographers 70: 207–225), we draw on Pulido's (2000, Annals of the Association of American Geographers 90: 12–40) work on the construction and perpetuation of white privilege to argue that the racialized production of space is a relevant framework for understanding the processes at work in Buckhead. We argue that race was an unstated but deeply important social relation shaping the process by which this particular space was remade. In so doing, we seek to advance the literature on whiteness by demonstrating the ways in which it articulates with the political economy of cities in the present conjuncture.     

A revealed preference index of urban amenities: Using travel demand as a proxy

We introduce an index of urban amenities based on hotel night stays that can rank most US metros for the years 1990 through 2015. This naive index can be used on its own to study changes in amenity level or with other measures to reduce omitted variable bias. Researchers can also use the index to create panel datasets from more sophisticated cross‐sectional indexes. Empirical testing shows the bundle of amenities associated with hotel stays has substantial effects on variation in housing prices across cities and time, validating our proxy variable approach. Testing for an association with wages is inconclusive.